Your Ultimate Guide: Seamlessly Moving Your 401(k) to Fidelity
Feeling overwhelmed by old retirement accounts scattered across different providers? Ready to take control of your financial future and consolidate your assets in one place with a trusted name like Fidelity? You're in the right spot! Moving your 401(k) to Fidelity can simplify your financial life, potentially offer more investment choices, and give you a clearer picture of your retirement savings. Let's embark on this journey together, step by step!
Step 1: Are You Ready to Roll? Assess Your Current 401(k) Situation
Before you even think about opening a new account, let's get a clear understanding of your current 401(k). This initial assessment is crucial to ensure a smooth transition and avoid any unexpected hitches.
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| How To Move 401k To Fidelity |
Sub-heading 1.1: Gather Your 401(k) Details
First things first, dig out any old 401(k) statements, off-boarding emails from your former employer, or anything that gives you information about your old plan.
Who is the provider? This is the financial institution currently holding your 401(k) funds. It could be Empower, Vanguard, Principal, or another major player.
Is it a Traditional or Roth 401(k)? This is vital for tax purposes. Traditional 401(k) contributions are pre-tax, while Roth 401(k) contributions are after-tax. Your destination IRA at Fidelity will ideally match this tax treatment.
What's your account number? Have this readily available.
What's the provider's contact number? You'll need this to initiate the rollover.
Is your mailing address updated with your old provider? This is critically important, especially if they send a physical check.
Sub-heading 1.2: Confirm Rollover Eligibility
Most 401(k) plans allow rollovers when you leave an employer. However, it's always wise to confirm.
Contact your former employer's HR department or your current 401(k) provider. Ask if your account is eligible for a rollover. Sometimes, there's a waiting period after you leave a company before funds can be transferred.
Check for outstanding loans. If you have a loan against your 401(k), you'll need to address this before rolling over the funds, as an unpaid loan can be considered a taxable distribution.
Step 2: Your New Home for Retirement: Open Your Fidelity Account
Now that you're armed with information about your old 401(k), it's time to set up your new account at Fidelity. Most people opt for a Rollover IRA (Individual Retirement Account) when transferring 401(k) funds.
QuickTip: A quick skim can reveal the main idea fast.
Sub-heading 2.1: Choose the Right Fidelity IRA
Fidelity offers various IRA types. Selecting the correct one is essential for maintaining the tax-advantaged status of your retirement savings.
For a Traditional 401(k): You'll generally want to open a Rollover IRA or a Traditional IRA. These maintain the pre-tax nature of your funds, meaning you won't pay taxes until you withdraw in retirement. A Rollover IRA is specifically designed for funds coming from employer-sponsored plans and can potentially be rolled into a new employer's plan later if allowed.
For a Roth 401(k): Choose a Roth IRA. Since you've already paid taxes on Roth 401(k) contributions, rolling them into a Roth IRA ensures tax-free growth and tax-free withdrawals in retirement.
If you have mixed assets (Traditional and Roth in one 401(k)): You might need to open two separate IRAs at Fidelity – one Traditional/Rollover IRA for the pre-tax portion and one Roth IRA for the after-tax portion. This is crucial for proper tax treatment.
Sub-heading 2.2: The Account Opening Process
Opening an IRA with Fidelity is straightforward and can typically be done online in just a few minutes.
Visit the Fidelity website: Navigate to their retirement planning section or search for "Open an IRA."
Provide personal information: This will include your Social Security number, date of birth, and contact details.
Fund the account (initially, if needed): While your 401(k) funds will be the primary deposit, you might need to make a small initial deposit to activate the account.
Consider Fidelity Go: If you prefer a hands-off approach to investing, Fidelity Go is their robo-advisor service that will manage your investments for you based on your risk tolerance and goals. You can open a Rollover IRA or Roth IRA through Fidelity Go as well.
Step 3: Making the Move: Contact Your Old 401(k) Provider
This is where you initiate the actual transfer of funds. This step often involves a phone call, so be prepared with all the information you gathered in Step 1.
Sub-heading 3.1: The Phone Call Strategy
Set aside about 30 minutes in a quiet space for this call. Have your old 401(k) statement and your new Fidelity IRA account number handy.
Call your old 401(k) provider's customer service.
State your intention to roll over your 401(k) to an IRA at Fidelity. Be clear that you want a direct rollover. This is the preferred method as it avoids tax withholding and penalties. In a direct rollover, the money is sent directly from your old provider to Fidelity.
Provide them with Fidelity's routing information. Your Fidelity representative can give you the exact details, but typically, checks for Fidelity IRA rollovers are made payable to "Fidelity Management Trust Company (or FMTC), FBO [Your Name]." If you're rolling into a new 401(k) at Fidelity (with a current employer), the check might be made out to "Fidelity Investments Institutional Operations Company, Inc. (or FIIOC), FBO [Your Name]."
Confirm the mailing address for the check. Emphasize that the check should be made out to Fidelity, not to you personally, to avoid potential tax implications.
Inquire about any required forms. Some providers may have their own rollover distribution forms that you'll need to complete and return. Fidelity may also need to provide a "Letter of Acceptance" (LOA) to your old provider.
Sub-heading 3.2: Understanding Direct vs. Indirect Rollovers
While a direct rollover is highly recommended, it's good to understand the difference.
Direct Rollover (Preferred): Funds are transferred directly from your old 401(k) provider to your Fidelity IRA. You never physically handle the money. This method generally incurs no taxes or penalties.
Indirect Rollover (Avoid if possible): Your old 401(k) provider sends the funds to you (or a check made out to you). You then have 60 days to deposit the entire amount into your Fidelity IRA. If you fail to deposit the full amount within this timeframe, it will be considered a taxable distribution and could be subject to income tax and a 10% early withdrawal penalty if you're under 59 ½. Furthermore, your old provider is required to withhold 20% for taxes, meaning you'd have to make up that 20% from other sources to roll over the full amount.
Tip: Let the key ideas stand out.
Step 4: Receiving the Funds: Depositing Your Rollover Check
Once your old 401(k) provider processes your request, they will issue a check. This check, ideally, will be made payable to Fidelity.
Sub-heading 4.1: How to Deposit Your Rollover Check to Fidelity
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Fidelity offers several convenient ways to deposit your rollover check:
Mobile Check Deposit (Easiest and Fastest): Use the Fidelity Investments mobile app to scan and deposit the check. This is generally the quickest method.
Mail the Check: Send the check via regular or overnight mail to Fidelity's processing center. Ensure the mailing address is correct (you can find this on the Fidelity website or by calling their customer service).
Visit a Fidelity Investor Center: If you have a Fidelity branch near you, you can deposit the check in person, and a representative can assist you.
Remember to include your new Fidelity IRA account number on the check or on any accompanying paperwork!
Step 5: Putting Your Money to Work: Invest Your Funds at Fidelity
Congratulations! Your 401(k) funds are now safely in your Fidelity IRA. But the journey isn't over. The next crucial step is to invest those funds to help them grow for your retirement.
Sub-heading 5.1: Explore Fidelity's Investment Options
One of the biggest advantages of rolling over to an IRA is the expanded investment universe compared to many 401(k)s.
Mutual Funds: Fidelity offers a vast selection of their own mutual funds, including popular index funds with low expense ratios (like Fidelity ZERO® index funds), and actively managed funds.
Exchange-Traded Funds (ETFs): Similar to mutual funds, but trade like stocks throughout the day. Fidelity offers a wide range of ETFs from various providers.
Stocks and Bonds: If you prefer to build your own portfolio, you can invest in individual stocks and bonds.
Managed Accounts (Fidelity Go/Fidelity Personalized Planning & Advice): If you'd rather have Fidelity manage your investments for you, explore their robo-advisor (Fidelity Go) or their more comprehensive advisory services.
Sub-heading 5.2: Develop Your Investment Strategy
Don't just let your money sit in cash! Think about your:
Tip: Focus more on ideas, less on words.
Time Horizon: How many years until you plan to retire? This influences your risk tolerance.
Risk Tolerance: How comfortable are you with market fluctuations?
Financial Goals: What are you saving for in retirement?
Fidelity provides numerous resources, tools, and even financial advisors to help you build a suitable investment strategy.
Related FAQ Questions
How to start a 401(k) rollover to Fidelity?
Begin by gathering details about your old 401(k) (provider, type, account number). Then, open the appropriate IRA (Rollover IRA or Roth IRA) at Fidelity. Finally, contact your old 401(k) provider to initiate a direct rollover of funds to your new Fidelity account.
How to avoid taxes and penalties when moving 401(k) to Fidelity?
To avoid taxes and penalties, always opt for a direct rollover. This means your old 401(k) provider sends the funds directly to Fidelity, made payable to Fidelity, without the money ever passing through your hands. If you receive a check made out to you, you have 60 days to deposit it fully into the IRA to avoid taxation and penalties, and 20% will be withheld.
How to choose between a Rollover IRA and a Roth IRA at Fidelity?
Choose a Rollover IRA (or Traditional IRA) if your old 401(k) was pre-tax (Traditional 401(k)). Choose a Roth IRA if your old 401(k) was Roth (after-tax). If you have a Traditional 401(k) and want to move it to a Roth IRA, this is a Roth conversion and will be a taxable event in the year of the conversion.
How to find my old 401(k) provider?
Check old statements, severance packages, or contact your former employer's HR department. They should be able to provide you with the necessary contact information.
QuickTip: Don’t just scroll — process what you see.
How to handle company stock in my 401(k) during a rollover to Fidelity?
If your 401(k) contains company stock, you might have specific tax considerations like Net Unrealized Appreciation (NUA). It's highly recommended to consult a tax advisor or Fidelity representative to understand the best way to handle these assets to optimize tax treatment.
How to track the progress of my 401(k) rollover to Fidelity?
Once you've initiated the rollover with your old provider, you can often track the status through their online portal or by calling their customer service. Once the check is mailed, you can also track its deposit status through your Fidelity account or by contacting Fidelity customer service.
How to invest my funds once they are in my Fidelity IRA?
Log in to your Fidelity account. You'll then have access to their wide range of investment options, including mutual funds, ETFs, stocks, and bonds. You can also utilize Fidelity's planning tools or consider a managed account service like Fidelity Go.
How to get help from Fidelity during the rollover process?
Fidelity has excellent customer service. You can call their dedicated rollover specialists (1-800-343-3548 for general inquiries, or 1-800-835-5097 for employer-sponsored accounts/401(k) participants), use their online chat, or visit a local Investor Center for in-person assistance.
How to roll over multiple 401(k)s to Fidelity?
The process is similar for each old 401(k). You'll follow the same steps (assess, open appropriate IRA, contact old provider, deposit) for each separate 401(k) account you wish to roll over. Consolidating multiple accounts can greatly simplify your retirement planning.
How to ensure I don't miss the 60-day deadline for an indirect rollover?
The best way is to avoid an indirect rollover entirely by requesting a direct rollover. If an indirect rollover is unavoidable, deposit the check immediately upon receipt into your Fidelity IRA. Mark your calendar and set reminders to ensure you meet the 60-day deadline to avoid adverse tax consequences.
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